It is great to be writing and witnessing such good news for sterling and the UK economy. Manufacturing posting the biggest gains in 19 years and Construction posting the biggest gains in six years! These are some of the best pieces of data and it all points to further growth in the economy for Quarter 3 and raises the chance of falling Unemployment which may lead to a UK rate hike. Investors are betting the UK will need to raise interest rates sooner than 2016 and this is being reflected in the pound making gains.
For now I would expect sterling to push higher against most currency pairs although there are still many risks to the economy which will weigh on confidence in the UK. The tone however is very positive so if you are looking to buy a foreign currency with sterling now is a good time to act. If the last few years have taught us anything, it is that just as the rates improve and confidence is high, something comes out of the woodwork to spoil the party. We are currently a 2 month high buying euros, 4 month high buying CHF, near or above 3 year highs buying CAD, AUD, 3 month high buying NZD and a near 5 year high buying ZAR!
September promises to be a very busy period and this month’s events may well shape movements on rates for the next few months. If you are considering a transaction why not find out what we can offer? Please contact me Jonathan on jmw@currencies.co.uk and I can explain further. We offer a specialist personal service to transfer money internationally at preferential rates above and beyond that offered by banks and other brokers. To test my commitment to save you money please feel free to make a no obligation email enquiry above.
September has a number of very important data releases which could move the market. Let us quickly scan each one and consider the impacts on the currency markets this month that will probably move your rates…
SYRIA – For the next few day markets will probably remain subdued until we have a firm outcome from the results of the UN Weapons Inspectors and find out whether Congress will support Obama. Like Cameron Obama can go it alone but with the shadow of Iraq and Afghanistan lingering over the West, intervention is bound to require extensive consensus. Effect on the markets? Should the US and France attack I would expect USD strength as investors seek safer havens. The USD strength may tip EURUSD as money flows out of the Euro and into the Dollar. This could present some buying opportunities on the Euro and other ‘riskier’ currencies like the ZAR, NZD, AUD and CAD. Sterling could benefit from a safe haven status although the political uncertainty in the UK may mean investors steer clear. The last thing the UK needs is the extra cost of another war so if it looks like the UK is getting drawn in, I would expect GBP weakness. The uncertainty presented to the market and the numerous outcomes the Syrian situation could take means predictions are difficult. If you are happy with current levels moving sooner and securing your funds may be the wisest and safest course of action. If you would like more information on your currency options please email me jmw@currencies.co.uk
ELECTIONS – First we have the Australian elections this weekend. I would not be surprised to see the Aussie strengthen following the result. Nearly one million people have already voted in a country where it is compulsory to vote so turnout is always high. In a very closely fought election the coalition have just lately overtaken the Labour government. With budget cuts being on the cards and the country slowly slowing down there is a chance the Aussie could weaken more in the coming weeks and months. If you are holding Australian dollars waiting to buy GBP I would view the post election spike (if we see it) as a good opportunity. For more information on buying or selling Australian dollars (including into or out of Euros) please contact me as rates remain volatile due to international pressures and attitudes to risk.
Towards the end of the month we have the German elections on the 22nd September which I expect to lead to Euro strength. Whilst the Euro crisis has played a role in the voting, improvements in the German economy have lent support to Merkel’s coalition and she should be safe. I would expect this would lead to Euro strength as it gives greater certainty of the future direction for the eurozone, that is further integration and greater ‘unity’.
THE FED – The $85 Billion dollar question The US Federal Reserve Bank are set to slow down (taper) their QE asset purchases. Quantitative Easing is where a central bank buys up government debt. In the US the Fed have pledged $85 billion of purchases every month. This ‘cheap money’ has helped fuel consumer spending, the property market and investment not just in the US but also globally. The very thought of the US tapering this monthly purchase is weighing on investors minds and the Fed know the impact this could have. Riskier assets (AUD, NZD, CAD) are all subject to weaken further if this goes ahead since their economies depend on strong global demand for raw materials. A scaling back of QE will limit the investment available in such economies and countries and hence cause a sell off on this currencies.
The USD has strengthened on the back of such indications and Wednesday September 18th is a key date for anyone interested in not just the US but all currencies as we have the Fed decision.
September promises to be a very busy period and this month’s events may well shape movements on rates for the next few months. If you are considering a transaction why not find out what we can offer? Please contact me Jonathan on jmw@currencies.co.uk and I can explain further. We offer a specialist personal service to transfer money internationally at preferential rates above and beyond that offered by banks and other brokers. To test my commitment to save you money please feel free to make a no obligation email enquiry above.
These are what I would highlight as some of the key issues but this week we have the UK and Eurozone Interest rate decisions where we will probably see information on forward guidance from both sides of the Channel. Then Friday we have the US Non-Farm Payroll data and Unemployment rate which will be the last big releases before the Fed decision later in the month.
Exchange rates are moving every few seconds according to investor sentiments and expectations. Rates can move or change a couple of cents in a day and are at times very difficult to predict. Our services are designed to highlight the latest trends and themes and offer a range of options to limit your exposure to the currency markets. If you do not have full availability of funds we can book rates forward and also insert stops and limits into the market so your exchange does not become more expensive than you had planned.
For a free, no obligation discussion of your transfers please contact me Jonathan on jmw@currencies.co.uk and I can explain further.
Jonathan